Shri Narinder Kumar, Pathankot V. The Income-tax Officer, Amritsar.

ITA 239/ASR/2014

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 2428 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 26-11-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 11-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR TARUNDEEP KAUR
• Assessee Lawyers: J S BHASIN
• Keywords: Business income; Bonafide belief; Futures and options
• Section: 143(3); 27; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH; AMRITSAR (SMC) BEFORE SH. A.D. JAIN, JUDICIAL MEMBER ITA NO.239(ASR)/2014 ASSESSMENT YEAR:2009-10 PAN: ABMPK1008P SH. NARINDER KUMAR VS. INCOME TAX OFFICER, C/O SAIN DAS SAT PAL SARNA, 6(2), PATHANKOT. PATHANKOT, (APPELLANT) (RESPONDENT) APPELLANT BY:SH. J.S. BHASIN, ADVOCATE RESPONDENT BY: DR. TARUNDEEP KAUR, DR DATE OF HEARING: 26/11/2015 DATE OF PRONOUNCEMENT: 22/02/2016 ORDER THIS IS THE ASSESSEES APPEAL FOR THE ASSESSMENT Y EAR 2009-10 AGAINST THE ORDER OF THE LD. CIT(A), DATED 15.01.20 14, UPHOLDING THE PENALTY OF RS.9,90,364/- LEVIED ON THE ASSESSEE U/S 271(1)(C) OF THE ACT. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS I NTO THE BUSINESS OF RETAIL TRADING IN CHOKER, CATTLE FEEDS, ETC. FOR T HE YEAR UNDER CONSIDERATION, OTHER THAN THIS BUSINESS, THE ASSESS EE SHOWED INTEREST AND SALARY FROM THE FIRM M/S. SAIN DASS SAT PAL, SA RNA, TEHSIL PATHANKOT. THERE WAS AIR INFORMATION WITH THE DEPAR TMENT THAT THE ASSESSEE HAD PURCHASED 1000 SHARES OF ICICI BANK O N 04.07.2008 FOR RS.5,90,000/- AND HAD ALSO DEPOSITED CASH OF RS.35, 00,000/- WITH HDFC BANK DURING THE FINANCIAL YEAR 2008-09 RELEVANT TO ASSESSMENT YEAR ITA NO.239(ASR)/2014 ASSESSMENT YEAR: 2014 2 2009-10. ON THE BASIS OF THE SAID AIR INFORMATION, THE ASSESSEES RETURN OF INCOME SHOWING INCOME OF RS.1,53,407/-CAME UNDER CASS. IN THE STATEMENT OF INCOME ATTACHED WITH THE ASSESSEES RE TURN OF INCOME, THE AO OBSERVED THAT THERE HAD BEEN GIVEN ALONGWITH THE RETURN OF INCOME, A NOTE THAT THE ASSESSEE HAD INVESTED CERTAIN AMOUNTS FROM UNDISCLOSED SOURCES IN TRADING OF SHARES AND HAD INCURRED TOTA L LOSS DURING THE YEAR UNDER CONSIDERATION AND HENCE, THERE WAS NO INCOME FROM BUSINESS ON THAT ACCOUNT. THE AO SPECIFICALLY ASKED THE ASSESSE E TO EXPLAIN THE SOURCE OF INVESTMENT IN RESPECT OF CASH OF RS.35,0 00/- IN HDFC BANK AND ALSO TO EXPLAIN THE SOURCE OF INVESTMENT IN PUR CHASE OF 1000 SHARES WORTH RS. 5 LACS OF ICICI BANK ON 04.07.2008 AND AL SO TO FILE A COPY OF BANK ACCOUNT WITH HDFC BANK AND ALSO RELEVANT DOCUM ENTARY EVIDENCE IN SUPPORT OF HIS EXPLANATION. IN RESPONSE, THE A SSESSEE STATED THAT HE HAD MADE CASH DEPOSITS FROM UNDISCLOSED SOURCE AND HAD ALSO INVESTED IN THE BUSINESS OF TRADING OF SHARES AND HAD INCURR ED HUGE LOSSES IN THE SAID TRANSACTIONS AND THAT HENCE, THE LOSSES MAY BE SET OFF AGAINST THE INCOME OF THE ASSESSEE, AS PER THE COPY OF EXPENSES ACCOUNT ENCLOSED THEREWITH. IT WAS ALSO STATED THAT THE ASSESSEE HAD NOT CONCEALED THE PARTICULARS OF HIS INCOME, SINCE THE FACTS OF INVES TMENT AND CASH DEPOSIT HAD BEEN DULY DECLARED AT THE TIME OF FILING THE RE TURN OF INCOME. 3. THE AO OBSERVED THAT PERUSAL OF TRADING-CUM-PROF IT & LOSS ACCOUNT IN RESPECT OF SHARE TRADING BUSINESS OF THE ASSESSE E SHOWED THAT THE SHARE TRADING BUSINESS HAD BEEN RUN IN CRORES OF RU PEES, AS UNDER: ITA NO.239(ASR)/2014 ASSESSMENT YEAR: 2014 3 1) LKP SECURITY LTD. 3,14,55,052/- PER COPY OF PAR TYS A/C FILED. 2) RELIANCE SECURITY LTD. 50,42,899 -D O- 3) TULI INVESTMENTS LTD. 81,09,809 -DO- TOTAL TRANSACTIONS 4,46,96,76 0 4. THE AO OBSERVED THAT THERE WAS NO AUDIT REPORT I N RESPECT OF HUGE SHARE BUSINESS TRANSACTION, DETAILS OF BOTH OPENIN G AND CLOSING STOCK, QUANTITATIVE DETAILS SHOWING SHARE SCRIP-WISE PURCH ASE AND SALE OF SUCH SHARES. THE AO MADE AN ADDITION OF RS.35,21,000/- T OWARDS UNEXPLAINED CASH DEPOSITS IN THE BANK, AS ALSO AN ADDITION OF R S.50,000/- REPRESENTING THE ASSESSEES OWN ADMITTED INVESTMEN T IN THIS REGARD. FURTHER, AN ADDITION OF RS.3,398/- WAS MADE TOWARD S UNEXPLAINED BANK INTEREST OF RS.278/- AND UNEXPLAINED DIVIDEND INCOM E OF RS.3,120/-, TOTALING TO RS.3,398/-. 5. IN THE PENALTY PROCEEDINGS, THE AO REJECTED THE ASSESSEES CONTENTION REGARDING NON-AVAILABILITY OF DETAILS OF INVESTMENT AND LOSSES IN THE SHARES, SUCH DETAILS BEING ALLEGEDLY UNTRACE ABLE. THE AO OBSERVED THAT THE REQUISITE INFORMATION IN THE FORM OF COPIE S OF ACCOUNT WITH VARIOUS SHARE DEALING CONCERNS COULD HAVE BEEN PROC URED AND EXACT COMPUTATION OF INCOME OR LOSS COULD HAVE BEEN FINIS HED ALONGWITH THE RETURN. IT WAS FURTHER OBSERVED THAT POSITIVE INFOR MATION ABOUT HUGE BANK DEPOSITS AND INVESTMENTS IN VARIOUS SHARES, WA S AVAILABLE WITH THE DEPARTMENT ALREADY, IN THE FORM OF THE AIR INFORMA TION. THE AO OBSERVED ITA NO.239(ASR)/2014 ASSESSMENT YEAR: 2014 4 THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICUL ARS IN RESPECT OF UNEXPLAINED CASH DEPOSITS OF RS.35,21,000/- AND HIS OWN INVESTMENT IN SHARES AMOUNTING TO RS.50,000/-, AS WELL AS UNEXPLA INED BANK INTEREST AND DIVIDEND INCOME AMOUNTING TO RS.3,398/- AND REJ ECTING THE ASSESSEES EXPLANATION AS UNSATISFACTORY, THE AO LE VIED THE MINIMUM PENALTY OF RS. 9,90,364/- ON THE ASSESSEE. THE LD. CIT(A) CONFIRMED THE SAME. 6. THE FIRST CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN UPHOLDING THE PENALTY LEVIE D BY THE AO U/S 271(1)(C) OF THE ACT WITHOUT RECORDING ANY SATISFAC TION IN THE ASSESSMENT ORDER IN THIS REGARD. WRITTEN SUBMISSION HAS ALSO B EEN FILED. 7. THE LD. DR HAS STRONGLY RELIED UPON THE IMPUGNED ORDER. WRITTEN SUBMISSION HAS ALSO BEEN FILED. IT HAS BEEN CONTEND ED THAT THIS ISSUE HAS BEEN RAISED WITHOUT ANY BASIS, AS THE AO HAS RECOR DED DUE SATISFACTION IN THE ASSESSMENT ORDER: PENALTY PROCEEDINGS ARE B EING INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME; AND THAT IN VIEW OF THIS CATEGORICAL SATISFACTION, THE ASSESSEES CASE DOES NOT HAVE ANY MERIT. 8. IN THIS REGARD, IT IS SEEN THAT DURING THE YEAR, BESIDES HIS REGULAR BUSINESS, THE ASSESSEE ENTERED INTO TRADING/DEALING IN SHARES, FUTURES AND OPTIONS, ETC., THROUGH SOME SHARE-BROKERS. HOWE VER, THE ASSESSEE COULD NOT EARN/SELL ANYTHING, DESPITE THE FACT THA T THE TRANSACTIONS WERE NUMEROUS. ALONGWITH THE RETURN OF INCOME, THE ASSES SEE DID NOT FILE THE PROFIT & LOSS ACCOUNT OR OTHER DETAILS FROM THE BRO KERS PERTAINING TO THE ITA NO.239(ASR)/2014 ASSESSMENT YEAR: 2014 5 DEALING IN SHARES. A NOTE WAS LEFT IN THE COMPUTATI ON OF INCOME, STATING THAT ASSESSEE INVESTED CERTAIN AMOUNTS FROM UNDISC LOSED SOURCES IN THE TRADING OF SHARES AND INCURRED TOTAL LOSS DURING TH E YEAR UNDER CONSIDERATION. HENCE, NO INCOME FROM BUSINESS ON TH AT ACCOUNT. 9. IN THE ASSESSMENT PROCEEDINGS, THE RELEVANT DETA ILS WERE PROCURED BY THE AO FROM THE CONCERNED BROKERS. THERE APPEARE D TO BE A LOSS OF RS.30,34,344/-. CASH DEPOSITS OF RS.35.21 LAKHS I N THE HDFC BANK ACCOUNT WERE EMPLOYED IN THE TRANSACTION. RS.50,000 /- FROM THE ASSESSEES OWN ACCOUNT WAS ALSO INVESTED IN THE SH ARES. THE AO COMPLETED THE ASSESSMENT TAKING THE TOTAL INCOME OF THE ASSESSEE AT RS.6,96,340/-, AS AGAINST THE RETURNED INCOME OF RS .1,53,407/-. THE AO MADE AN ADDITION OF RS.35,74,398/-. OUT OF THIS, RS .35.21 LAKHS REPRESENTED UNEXPLAINED DEPOSITS IN BANK, RS.50,000 /- TOWARDS OWN INVESTMENT SHOWN IN THE COPY OF ACCOUNT AND RS.3,39 8/- REPRESENTED BANK INTEREST AND DIVIDEND NOT SHOWN IN THE RETURN OF INCOME. THE AO ALLOWED ADJUSTMENT OF LOSS SUFFERED ON SHARES OF RS .30,34,344/- AND ACCORDINGLY, THE NET ADDITION OF RS.5,40,054/- WAS MADE TO THE ASSESSEES RETURNED INCOME. IN THE ASSESSMENT ORDER , THE AO DULY RECOGNIZED THE ASSESSEES AFORESAID NOTE GIVEN IN T HE STATEMENT OF INCOME. HOWEVER, NO FINDING OF CONCEALMENT OF INCOM E BY THE ASSESSEE WAS RECORDED BY THE AO AND THE PENALTY WAS INITIAT ED BY MERELY OBSERVING THUS: PENALTY PROCEEDINGS U/S 271(1)(C) FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME HAS BEEN INITIATED SEPARATELY. ITA NO.239(ASR)/2014 ASSESSMENT YEAR: 2014 6 10. IN THE PENALTY ORDER, HOWEVER, THE AO HELD THE ASSESSEE TO BE LIABLE FOR PENALTY FOR FURNISHING INACCURATE PARTIC ULARS OF INCOME IN RESPECT OF TOTAL INVESTMENT OF RS.35.71 LAKHS MADE IN SHARES TRADING, PLUS DIVIDEND OF RS.3,398/-. HE REJECTED THE ASSES SEES EXPLANATION THAT THE FACTUM OF INVESTMENT MADE FROM UNDISCLOSED SOUR CES STOOD ALREADY DECLARED IN THE RETURN OF INCOME. IN THE ORDER UNDE R APPEAL, THE LD. CIT(A) UPHELD THE PENALTY BY OBSERVING THAT A MERE NOTE AP PENDED IN THE STATEMENT OF INCOME, WOULD NOT ABSOLVE THE ASSESSEE FROM DISCHARGING HIS ONUS TO DISCLOSE TRUE AND FULL PARTICULARS OF H IS INCOME OR LOSS FROM ALL SOURCES. RELIANCE WAS ALSO PLACED ON THE MATERI AL GATHERED BY THE AO. THE BONAFIDES OF THE ASSESSEE WERE DOUBTED. IT WAS HELD THAT THE ASSESSEES CASE FELL WITHIN EXPLANATION 1 TO SECT ION 271(1)(C) OF THE ACT. 11. NOW, EVIDENTLY THE AO HAS NOT RECORDED HIS SATI SFACTION AS TO THE INCOME IN RESPECT OF WHICH THE ASSESSEE ALLEGEDLY F URNISHED INACCURATE PARTICULARS AND ONLY STATED THAT THE PENALTY U/S 27 1(1)(C) OF THE ACT FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME HAD BEEN INITIATED SEPARATELY. 12. AS RIGHTLY CONTENDED, IN MS. MADHUSHREE GUPTA VS. UOI 317 ITR 107 (DEL.), IT HAS BEEN, INTER-ALIA, HELD THAT THE PROVISION OF LAW BOTH PRE AND POST AMENDMENT IS SIMILAR, INASMUCH AS THE AO W ILL HAVE TO ARRIVE AT A PRIMA FACIE SATISFACTION DURING THE ASSESSMEN T PROCEEDINGS REGARDING THE ASSESSEE HAVING CONCEALED PARTICULAR S OF INCOME OR HAVING FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, BE FORE HE INITIATES ITA NO.239(ASR)/2014 ASSESSMENT YEAR: 2014 7 PENALTY PROCEEDINGS. THIS, AS DISCUSSED, HAS NOT BE EN DONE IN THE PRESENT CASE. 13. THE INCOME ASSESSED IN THE PRESENT CASE IS THAT OF RS.6,96,340/-. THE INCOME RETURNED WAS AT RS.1,53,407/-. THE DIFF ERENCE COMES TO RS.5,40,054/-. NOW, EVEN IF THE INITIATION OF PENAL TY PROCEEDING IS ACCEPTED AS THE AOS SATISFACTION, IT CAN AT THE MO ST RELATE TO THIS AMOUNT OF RS.5,40,054/-, THIS AMOUNT, IF AT ALL, REPRESENT ING UNDISCLOSED INVESTMENT MADE IN THE SHARES, ONCE, UNDENIABLY, TH E TRADING IN SHARES DID NOT YIELD ANY PROFIT TO THE ASSESSEE AND RATHER , IT RESULTED IN A LOSS. THIS BEING THE CASE, THE MATTER IS SQUARELY COVERED BY THE DISCLOSURE MADE IN THE STATEMENT OF INCOME, PARTICULARLY WHEN THE SUBSTANTIAL LOSS OF RS.30,34,344/- SUFFERED BY THE ASSESSEE STANDS A CCEPTED BY THE AO. THE AO, THUS, ERRED IN ENLARGING THE SCOPE OF CONCE ALED INCOME TO THE ENTIRE UNEXPLAINED CASH DEPOSITS AND INVESTMENT MAD E IN SHARES. HENCE, IT CANNOT BE SAID THAT THE NOTE APPENDED BY THE ASS ESSEE IN THE STATEMENT OF INCOME ALONGWITH THE RETURNED INCOME, DID SHOW THE ASSESSEES INTENTION NOT TO HIDE ANY INCOME OR INVE STMENT. THE NOTE, IT IS NOTEWORTHY, WAS FOUND TO BE CORRECT. TO REITERATE, THE ASSESSEES BELIEF OF HUGE LOSS OF THE ENTIRE INVESTMENT IN SHARES, WHICH WAS FOUND TO BE AMOUNTING TO RS.30,34,344/-, WAS NOT MALAFIDE. THER EFORE, THE LD. CIT(A) ERRED IN OBSERVING THAT THE ASSESSEE HAD FAILED TO ESTABLISH HIS BONAFIDES. TO REITERATE, THE ASSESSEES CLAIM OF LOSS WAS FOUN D TO BE CORRECT. IN FACT, THE LOSS WAS ASSESSED AT RS.30,34,344/-. ITA NO.239(ASR)/2014 ASSESSMENT YEAR: 2014 8 14. THE HONBLE SUPREME COURT, IN CEMENT MARKETIN G CO. OF INDIA LTD. VS. ASSTT. CST, 124 ITR 15 (SC), HAS HELD, IN TER-ALIA, THAT WHERE THE ASSESSEE DOES NOT INCLUDE A PARTICULAR ITEM IN THE TAXABLE TURNOVER UNDER A BONAFIDE BELIEF THAT HE IS NOT LIABLE SO TO INCLU DE IT, IT WOULD NOT BE RIGHT TO CONDEMN THE RETURN AS A FALSE RETURN, INVI TING IMPOSITION OF PENALTY. IN THE PRESENT CASE, AS SEEN, THE BELIEF O F THE ASSESSEE HAS NOT BEEN FOUND TO BE A MALAFIDE BELIEF AND, ON THE CONT RARY, THE LOSS CLAIMED BY THE ASSESSEE HAS BEEN ASSESSED AT RS.30,34,344/- . 15. SIMILAR IS THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF HINDUSTAN STEEL LTD. VS. STATE OF ORISSA, 83 ITR 26 (SC). 16. THE LD. CIT(A) HAS HELD THAT EXPLANATION 1 TO S ECTION 271(1)(C) OF THE ACT IS APPLICABLE IN THIS CASE. NOW, IN NATIO NAL TEXTILES VS. CIT, 249 ITR 125 (GUJARAT), IT HAS BEEN HELD, INTER-ALIA, TH AT IN ORDER TO JUSTIFY LEVY OF PENALTY, THERE MUST BE SOME MATERIAL OR CIRCUMST ANCES LEADING TO A REASONABLE CONCLUSION THAT THE AMOUNT DOES REPRESEN T THE ASSESSEES INCOME AND THE CIRCUMSTANCES MUST SHOW THAT THERE W AS CONSCIOUS CONCEALMENT OR ACT OF FURNISHING OF INACCURATE PAR TICULARS; THAT EXPLANATION 1 TO SECTION 271(1)(C) DOES NOT MAKE TH E ASSESSMENT ORDER CONCLUSIVE EVIDENCE THAT THE AMOUNT ASSESSED WAS IN FACT THE INCOME OF THE ASSESSEE. IN THIS REGARD, AS OBSERVED, IN THE R EASSESSMENT ORDER, THE LOSS CLAIMED BY THE ASSESSEE WAS ASSESSED AT RS.30, 34,344/-, DUE TO WHICH FACT ITSELF, THE ASSESSMENT ORDER CANNOT BE M ADE THE BASIS OF LEVY OF THE PENALTY IN QUESTION. ITA NO.239(ASR)/2014 ASSESSMENT YEAR: 2014 9 17. MOREOVER, EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT DEEMS THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF AN ASSESSEE, TO REPRESENT HIS INCOME IN RESPECT OF WHI CH PARTICULARS HAVE BEEN CONCEALED, WHERE SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND TO BE FALSE, OR HE OF FERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO P ROVE THAT SUCH EXPLANATION IS BONAFIDE AND THAT ALL THE FACTS RELA TING TO THE SAME AND MATERIAL TO THE COMPUTATION OF INCOME OF HIS TOTAL INCOME HAVE BEEN DISCLOSED. IN THE PRESENT CASE, THE EXPLANATION OF THE ASSESSEE CONSISTED OF THE AFORESAID NOTE APPENDED TO THE STATEMENT OF INCOME FILED ALONGWITH THE RETURN OF INCOME. THIS EXPLANATION WAS NOT FOUN D TO BE FALSE, NOR IS IT THE CASE OF THE DEPARTMENT THAT THE ASSESSEE FAILED TO SUBSTANTIATE SUCH EXPLANATION. THE ASSESSEE HAS ALSO NOT FAILED TO PR OVE THAT HIS EXPLANATION IS BONAFIDE AND THAT ALL THE FACTS RELA TING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS INCOME HAVE BEEN DISCLOSED BY HIM. 18. IN CIT VS. UPENDRA V. MITHANI, VIDE ORDER DA TED 05.08.2009, IN ITA NO.1860 OF 2009, THE HONBLE BOMBAY HIGH COURT HAS HELD THAT IF THE ASSESSEES GIVES AN EXPLANATION WHICH IS UNPROVED BUT NOT DISPROVED, I.E., IT IS NOT ACCEPTED, BUT THE CIRCUMSTANCES DO NOT LEAD TO THE REASONABLE AND POSITIVE INFERENCE THAT THE ASSESSEE S CASE IS FALSE, THEN THE PENALTY IS NOT IMPOSABLE. IN THE CASE OF THE PR ESENT ASSESSEE, THE ASSESSEE CLAIMED A LOSS. THIS LOSS WAS NOT QUANTIF IED. THE AO, HOWEVER, IN THE ASSESSMENT PROCEEDINGS, CARRIED OUT AN INVES TIGATION. THE ITA NO.239(ASR)/2014 ASSESSMENT YEAR: 2014 10 ASSESSEE WAS FOUND INDEED TO HAVE INCURRED A LOSS I N THE DEALING OF SHARES. THIS LOSS WAS NOT QUANTIFIED AND WAS ACCEPT ED AT RS.30,34,344/- 19. THUS, IN NO WAY CAN EXPLANATION 1 TO SECTION 27 1(1)(C) OF THE ACT BE SAID TO BE APPLICABLE TO THE PRESENT CASE. 20. IN VIEW OF THE ABOVE, FIRSTLY, THE AO IS NOT FO UND TO HAVE RECORDED ANY SATISFACTION IN THE ASSESSMENT ORDER REGARDING THE ASSESSEE HAVING EITHER CONCEALED PARTICULARS OF HIS INCOME, OR TO H AVE FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. FURTHER, EVE N OTHERWISE, AS DISCUSSED, CONCEALMENT PENALTY IS NOT LEVIABLE IN T HE PRESENT CASE AND IT HAS WRONGLY BEEN LEVIED AND CONFIRMED BY THE LD. CI T(A). 21. IN VIEW OF THE ABOVE, THE OTHER CONTENTION OF T HE ASSESSEE, THAT WHILE CONFIRMING THE PENALTY AT RS.9,90,364/-, THE LD. CIT(A) FAILED TO TAKE NOTICE OF THE AMOUNT OF TAX SOUGHT TO BE EVADE D, I.E., RS. 1,13,552/-, WHEN THE INCOME RETURNED AT RS.1,53,407/- WAS ASSES SED ONLY AT RS.6,96,336/- UNDER SECTION 143(3) OF THE ACT, NO L ONGER SURVIVES. 22. THE LD, DR HAS ALSO FILED AN APPLICATION UNDER RULE 27 OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, CONTENDING T HEREIN, THAT THE LD. CIT(A) FAILED TO TAKE COGNIZANCE OF THE FACT THAT T HE ASSESSEE HAD MADE SURRENDER FROM UNDISCLOSED SOURCES, WHICH CLEARLY F ELL BEYOND THE PURVIEW OF SECTION 12 OF THE ACT AND THUS THE LOSS ON ACCOUNT OF TRADING IN SHARES WAS NOT TO BE SET OFF AGAINST THE SAID SU RRENDER MADE ON ACCOUNT OF UNDISCLOSED SOURCE. RELIANCE IN THIS REG ARD HAS BEEN PLACED ON THE DECISION OF THE HONBLE PUNJAB & HARYANA HIG H COURT, IN THE CASE ITA NO.239(ASR)/2014 ASSESSMENT YEAR: 2014 11 OF KIM PHARMA LTD., 254 CTR (P&H) 454, WHEREIN, I T HAS BEEN HELD THAT SURRENDER FROM UNDISCLOSED SOURCE CANNOT BE TREATED AS BUSINESS INCOME. 23. IN HIS REPLY TO THE AFORESAID APPLICATION, THE ASSESSEE HAS CONTENDED THAT SINCE THE DEPARTMENT DID NOT PREFER ANY APPEAL AGAINST THE LD. CIT(A)S ORDER, THE SAID ORDER STANDS ACCEP TED IN TOTO BY THE DEPARTMENT AND THEREFORE, NO APPLICATION UNDER RULE 27 OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, IS COMPETENT. IT HA S FURTHER BEEN CONTENDED THAT AS PER SECTION 253(2) OF THE ACT, IT IS THE PRINCIPAL CIT/CIT WHO CAN DIRECT THE AO TO PREFER AN APPEAL TO THE TRIBUNAL, IF HE OBJECTS TO THE ORDER OF THE CIT(A), WHEREAS THE PRE SENT APPLICATION HAS BEEN FILED BY THE DR OF HIS OWN, WHICH, AGAIN, IS N OT IN ACCORDANCE WITH LAW AND IS ILLEGAL. IT HAS BEEN CONTENDED THAT THE ISSUE NOW SOUGHT TO BE RAISED WAS NEVER TAKEN BY THE DEPARTMENT BEFORE THE LD. CIT(A) AND, THEREFORE, IT DOES NOT EMANATE FROM THE CIT(A)S OR DER, FOR WHICH REASON ALSO, RULE 27 OF THE INCOME TAX (APPELLATE TRIBUNAL ) RULES CANNOT BE INVOKED. 24. APROPOS THE ASSESSEES OBJECTION THAT SINCE THE ORDER OF THE LD. CIT(A) WAS ACCEPTED IN TOTO AND NO APPEAL WAS FILED , THE APPLICATION IS NOT MAINTAINABLE, IT IS SEEN THAT RULE 27 OF THE IN COME TAX (APPELLATE TRIBUNAL) RULES PROVIDES FOR AN APPLICATION ON AN I SSUE, IN ORDER TO SUPPORT THE LD. CIT(A)S ORDER, IN CASE NO APPEAL A GAINST THE SAID ISSUE HAS BEEN PREFERRED. NOW, UNDENIABLY, THE DEPARTMENT HAS NOT FILED ANY ITA NO.239(ASR)/2014 ASSESSMENT YEAR: 2014 12 APPEAL WHATSOEVER AGAINST THE LD. CIT(A)S ORDER. B E THAT AS IT MAY, SUCH NON-FILING OF APPEAL BY THE DEPARTMENT CANNOT DEP RIVE OF ITS RIGHT OF INVOCATION OF RULE 27, IN CASE THE ACTION ARISES. 25. HOWEVER, THE ASSESSEE IS CORRECT IN CONTENDING THAT THE APPLICATION HAS NOT BEEN FILED BY THE PERSON AUTHORIZED TO DO S O, IN AS MUCH AS ACCORDING TO SECTION 253(2) OF THE ACT, IT IS EITHE R THE PRINCIPAL CIT, OR THE CIT, WHO CAN DIRECT THE AO TO PRERFER AN APPEAL AGA INST THE LD. CIT(A)S ORDER BEFORE THE TRIBUNAL, IF THE SAID ORDER IS OBJ ECTED BY THE PRINCIPAL CIT/CIT. HEREIN, ON OTHER HAND, THE APPLICATION HAS BEEN PREFERRED BY THE LD. DR. THIS NOT BEING IN ACCORDANCE WITH SECT ION 253(2) OF THE ACT, THE APPLICATION IS NOT MAINTAINABLE ON THIS SCORE I TSELF. 26. SO FAR AS REGARDS THE ASSAILING OF THE FAILUR E OF THE LD. CIT(A) TO TAKE COGNIZANCE OF THE ASSESSEES SURRENDER FROM UN DISCLOSED SOURCES AND THE CONTENTION THAT THE LOSS ON ACCOUNT OF TRAD ING IN SHARES WAS NOT TO BE SET OFF AGAINST THE SAID SURRENDER, THIS ISSU E WAS NEVER RAISED BY THE DEPARTMENT BEFORE THE LD. CIT(A), DUE TO WHICH THERE AROSE NO OCCASION FOR THE LD. CIT(A) TO DECIDE THE SAME. HEN CE, IT CANNOT BE SAID THAT THIS ISSUE HAS BEEN DECIDED BY THE LD. CIT(A) AGAINST THE DEPARTMENT. NOW, ONCE IT IS SO, FOR THIS REASON AL SO, THE APPLICATION IS NOT MAINTAINABLE, SINCE THE RULE UNDER WHICH IT HAS BEEN FILED, I.E., RULE 27, CLEARLY STATES SUCH AN APPLICATION TO BE MAINTA INABLE IF AN ISSUE HAS BEEN DECIDED AGAINST THE RESPONDENT AND THE RESPOND ENT SEEKS TO SUPPORT THE LD. CIT(A)S ORDER THEREON. ITA NO.239(ASR)/2014 ASSESSMENT YEAR: 2014 13 27. IN THIS REGARD, IN CIT, CENTRAL II VS. DIVIN E INFRACON PVT. LTD., THE HONBLE DELHI HIGH COURT HAS, VIDE ITS DECISIO N DATED 13.8.2015, IN ITA NO.185(ASR)/2015, INTER-ALIA, HELD THAT RULE 27 OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES WOULD NOT EXTEND TO PER MITTING THE RESPONDENT TO EXPAND THE SCOPE OF AN APPEAL AND AS SAIL THE DECISION ON ISSUES, WHICH ARE NOT SUBJECT MATTER OF APPEAL. NO DECISION TO THE CONTRARY HAS BEEN CITED BEFORE THIS BENCH. 28. IN VIEW OF THE ABOVE, THE APPLICATION FILED BY THE DEPARTMENT IS REJECTED, AS NOT MAINTAINABLE. 29. IN THE RESULT, THE APPEAL IS ALLOWED AS INDICAT ED. ORDER PRONOUNCED IN THE OPEN COURT ON 22/02/20 16. SD/- (A.D. JAIN) JUDICIAL MEMBER DATED: 22/02/2016 /SKR/ COPY OF ORDER FORWARDED TO: 1. THE ASSESSEE:SH. NARINDER KUMAR, SARNA 2. THE ITO WARD 6(2), PATHANKOT 3. THE CIT(A), ASR. 4. THE CIT, ASR. 5. THE SR. DR, ITAT, ASR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH: AMRITSAR.